The 10 Commandments of Life Insurance
Here are a few guidelines to help you when it comes to life insurance. The goal here is to avoid land mines. The following is a list of essential do’s and don’ts. At the risk of over-simplifying:
1. Regular review = Better coverage, lower premiums.
A regular review of your life insurance portfolio gets top billing. Products change, your goals and objectives change, health may change and things such as beneficiary designations tend to change. At least every 2-3 years, review your goals, objectives and your inforce policies. The purpose of reviewing your policies is not only to check premiums against the current market but to also learn about new policies and new riders that add value and increase how the policy may benefit you. For example, new riders are available today that allow you to draw against the face value of the policy if you have a serious health event such as a heart attack or stroke.
2. Ownership and Beneficiary Issues.
Discuss the owner and beneficiary of each policy with an experienced agent and/or advisor who understands the objective of each policy. Do you have policies in a trust? Do you still need a trust? Circumstances change such as business partners, spouses, children, tax laws, etc.
3. How Long Should the Coverage Last?
The issue of coverage duration is huge. Nearly everything revolves around how long you need or want the policy to be inforce. It should be established early in the buy or review process, almost before any other decisions are made. Once you decide how long the coverage should last, decisions such as term vs. permanent become much easier to make. As people get older, feelings about duration often change. Many 35-40 year old buyers are convinced they only need coverage until retirement or when their kids finish school. As those events get closer, most people attempt to extend the coverage period.
4. Installment payout option or Lump-sum proceeds?
Are the policy proceeds of your current policies paid in a lump-sum (like a lottery payout)? Most people buying life insurance for income replacement prefer the installment payout option which is the equivalent of buying a guaranteed income stream? Premiums are significantly lower and the proceeds are paid for as long as you determine. Visit www.InstallmentLife.com for more information.
5. Policy Type.
There are many types of policies and there is a perfect one for you. The lowest priced policy is not the best policy. Among policy types, the most important decision you must make is either a term policy or a permanent policy. Good policies have many riders that add tremendous value to the policy. You can add “applications” to your life insurance policy that allow you to invest in the stock market or allow you to borrow on a tax favored basis.
6-10: The next column will continue the list of guidelines intended to help you be a better life insurance buyer.
Ted Bernstein is a third-generation licensed life insurance specialist and nationally recognized industry innovation expert in alternative distribution strategies and life insurance product development with decades of speaking out and advocating for changes on behalf of consumers. A member of the Association for Advanced Life Underwriting, he was the first to introduce life insurance without commissions or “no-load” life insurance in the mid-1980s and launch the first fee-based Life Insurance Policy Audit and Review service for trust companies and life insurance fiduciaries. His newly introduced innovation, the Installment Life Option, is game-changing. To learn more, visit www.lifeinsuranceconcepts.com or call 561-988-8984.